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GAZETTE
DECEMBER 1991
The exposure under the stamp duty
provisions is far greater for the
professional than under the CAT
provisions. A professional under the
stamp duty provisions will be liable
qua professional, and, possibly,
under the provisions of section 94,
whereas under the CAT provisions
he can only be liable qua
accountable person unless he falls
within the provisions of section 94.
It may be convenient at this stage
to list some of the areas where
professionals must consider the
provisions of both sets of
legislation and the effect that
legislation may have if they fail to
identify or notify dutiable or taxable
situations.
Situations
Associated companies
Transfers of property between
associated companies carry a
liability for stamp duty at 2%
(provided they fulfil the conditions)
and in addition there
may
be some
element of gift (or inheritance)
passing by reason of the transfer
between associated companies.
Historically many associated
companies
would
transfer
properties at historical value or at
book value. This can still take place
provided
the real or market value
is notified to the Revenue
Commissioners in a statement to
accompany the instrument. In this
event, there is no material
difference for stamp duty purposes
in submitting the market value in
the instrument or in the statement.
It may have for other purposes
and that has to be borne in mind,
for example, balancing charges
etc.
The same consideration applies to
CAT.
Grant/Exercise of option
Normally, for stamp duty purposes
stamp duty will be payable on the
consideration for the grant. If that
grant conceals a voluntary dis-
position, the surcharge provisions
of both stamp duty and CAT must
be borne in mind and an appro-
priate statement must accompany
the instrument of grant.
An option whether over land or not,
is an item of property separate from
the underlying property
(George
Wimpey -v- IRC
(1975) 2 All ER 45)
- it is not a contract for sale of any
equitable estate or interest in
property under S. 59 Stamp Act,
1891. A voluntary disposition can
arise where, for example, a parent
transfers the right to exercise a
favourable option to a child or
where an enforceable option is
granted to a child, for a nominal
consideration,
to
purchase
property, at present worth (say)
£500,000, at a future date for
£200,000.
Similarly, on the exercise of the
option, a written notice exercising
the option may constitute an
agreement for sale of an equitable
interest in property stampable
under Section 59, Stamp Act,
1891. If so, it or the instrument
giving effect to the transfer, is
stampable. Again, if a gift or
voluntary disposition is hidden in
the exercise of the option, it must
be brought to the notice of the
Revenue Commissioners in an
appropriate statement. This may
arise where, on the exercise of the
option, the transferor agrees to take
consideration less than the option
price. For stamp duty purposes, the
statement is required. For CAT
purposes, the market value is
required and a return (if necessary)
must be submitted.
The signed copy letter of accept-
ance of a proposed mortgage may
be, now, a stampable document
even if the mortgage is never taken
up.
Probate
For probate purposes, valuations
have often been depressed. Probate
should not, in itself, give rise to
stamp duty problems, although an
appropriation under Section 55
Succession Act, 1965 could bear
stamp duty unless the will gives the
authority for the appropriation. It is,
however, a serious problem for CAT
purposes. In addition, a low probate
value will have serious capital gains
tax problems on any future disposal.
Even if the value is uplifted, for CAT
purposes, at the valuation date, the
low date of death value has the
problems for capital gains tax
(Section 15 CGTA, 1975) already
referred to.
If the probate value is low, giving
rise to a subsequent capital gains
tax liability, that liability is not a
credit against the CAT liability
arising on the death. They are
referable to different "events".
Connected persons
Very often, as with associated
companies, transactions take place
between connected persons at
book value or written down value
or at reduced value. This must now
be brought to the attention of the
Revenue Commissioners in a
statement for stamp duty purposes
and, if necessary, a return made
with true market value included for
CAT purposes. The same con-
siderations as apply to associated
companies are involved here.
Voluntary dispositions
All voluntary dispositions give rise
to stamp duty and CAT considera-
tions and, as for associated
companies, if the "value" in the
instrument is below the market
value, this must be brought to the
attention of the Revenue Com-
missioners for both taxes. A CAT
return is required and a statement
for stamp duty purposes. Failure to
do this may leave the parties liable
to the surcharges and other
penalties. The donor is also liable to
stamp duty and the solicitor
advising him must ensure his
protection in the event of under
valuation.
The solicitor must also be able to
obtain some form of comfort in
relation to the stamp duty from the
donee or ultimately from the
Revenue Commissioners. The
question must now arise as to
some form of certificate of pay-
ment of stamp duties, particularly,
for trustees, personal repre-
sentatives, etc. The adjudication
stamp is only a comfort for a
purchaser. The accountable parties,
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